If Activity Level Increases,what Happens to the

question 128

Multiple Choice

If activity level increases,what happens to the

• A)It remains the same.
• B)It decreases.
• C)It increases.
• D)It depends on how much the activity level increases.

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Definitions:

Current Ratio

A metric assessing how effectively a company can fulfill its short-term financial commitments with its assets on hand.

Acid-test Ratio

A stringent measure of liquidity that evaluates a company's ability to cover its short-term liabilities with its most liquid assets.

Receivable Turnover

A financial metric that measures how quickly a company collects payments from its customers by comparing sales to accounts receivable.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a particular period, indicating the efficiency of inventory management.